sweet papaya business plan

BUSINESS PLAN

PREPARED FOR

SWEET

PAPAYA

BY MELINDA SCHOENFELD

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1.0 Executive Summary

Sweet Papaya is a premium, gourmet, organic chocolate manufacturer that specializes in

creating a fantasy experience through succulent tastes, creative products, romantic

packaging, superior quality, and competitive prices.

The company projects annual revenues of $1.2 million within five years by aggressively

marketing our brand and vision through the Internet and various distribution channels to

service the retail market. A global presence will help to achieve stellar growth and brand

recognition.

The premium chocolate industry is one of the shining areas of the confectionery industry.

With increased attention being paid to increasing obesity rates, organic dark chocolate is

scientifically proven to have health benefits. Market studies show the more affluent

consumer prefers premium, organic chocolate and has a higher tolerance to economic

fluctuations.

The largest growing segment of the market is Baby Boomers. Even though Baby

Boomers tend to eat fewer sweets, they prefer a higher quality, premium chocolate to

other confections. The largest consumer of confections is the five – 14 year olds. This

group, however, is showing stagnant numbers in their growth projections. This group is

also less likely to consume premium chocolate in favor of non-chocolate confections.

Many opportunities exist within this growing segment of the confectionery market.

These include an expansion of the product line that uses chocolate as an ingredient

includes vitamin-enriched energy bars, Twist products, body and bath products, other

gourmet food items, cooking sauces, and specialty lines targeted at specific consumers

including women, children, and the erotic industry.

Sugar free, low carb, organic, and premium chocolates are driving up sales in this $17.8

billion industry. Unlike other industries, the premium chocolate niche market has

produced a plethora of small, independent chocolate producers that thrive by creating a

high-end product that optimizes an image of quality and superiority for the more

discerning consumer. This target market does not like the taste of low-fat or fat-free

chocolates allow themselves to enjoy a smaller amount of a premium chocolate instead of

a lower quality, lower calorie substitute.

This business plan has been prepared to forecast all financial statements for three years,

as well as to obtain initial funding of $35,000. This will cover initial start-up costs of

$22,000 as well as operating expenses for the first year of $13,000. Sweet Papaya

projects revenue of $50,000 by the end of year one, $165,000 by the end of year two, and

$332,500 by the end of year three.

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Table 1.0: Highlights

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2006 2007 2008

Sales Gross Profit Net Income (Loss)

1.1 Objectives

The objectives of Sweet Papaya are as follows:

To achieve first year sales figures of $50,000.

To achieve local and regional sales of $15,000 in the second year, 2007.

To achieve national sales of $25,000 in the third year, 2008.

To achieve global sales of $45,000 in the fourth year, 2009.

To achieve $1.2 million in sales by the fifth year, 2010.

To make inroads into the entertainment industry within the first five years.

To create an unparalleled brand image of romance and euphoria.

1.2 Mission

Sweet Papaya will use the highest quality premium, organic chocolate to produce a

creamy, succulent line of gourmet chocolates using exotic flavors and smooth textures.

Our company is dedicated to providing customers a euphoric taste experience that

titillates the palette and excites the senses. Sweet Papaya will provide its pampered

customers a consistent taste experience in romantic packaging for the ultimate chocolate

adventure at a competitive price.

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1.3 Keys to Success

The keys to success for Sweet Papaya are as follow:

Obtain Small Business Loan.

Creating the perfect packaging and color scheme.

Developing the necessary marketing materials.

Creating the fantasy advertising slogans.

Creating systems and procedures so successes are repeatable. Any success that

cannot be repeated is not really a success, it’s just a coincidence.

Developing and perfecting existing and new chocolate recipes and products.

Developing a creative web site for Internet marketing.

Implementing the business plan and updating the information.

Understanding the market and the target consumer.

Continually learning.

Creating the market instead of reacting to the market. Being a Trend Setter.

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Table of Contents

1.0 Executive Summary 2

1.1 Objectives 3

1.2 Mission 3

1.3 Keys to Success 4

2.0 Company Summary 6

2.1 Company Ownership 6

2.2 Start-up Summary 6

2.3 Company Locations and Facilities 8

3.0 Products 8

3.1 Competitive Comparison 9

3.2 Sales Literature 9

3.3 Future Products 9

4.0 Market Analysis Summary 10

4.1 Market Segmentation 11

4.1.1 SWOT Analysis

4.2 Industry Analysis 11

4.2.1 Industry Participants 12

4.2.2 Distribution Patterns 14

4.2.3 Competition and Buying Patterns 15

5.0 Strategy and Implementation Summary 15

5.1 Marketing Strategy 15

5.1.1 Pricing Strategy 16

5.2 Sales Strategy 17

5.2.1 Sales Forecast 17

6.0 Management Summary 18

6.1 Personnel Plan 19

7.0 Financial Plan 19

7.1 Important Assumptions 19

7.2 Break-even Analysis 20

7.3 Projected Profit and Loss 21

7.4 Projected Cash Flow 23

7.5 Projected Balance Sheet 24

7.6 Business Ratios 26

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2.0 Company Summary

Sweet Papaya will create, develop and market premium, gourmet, organic chocolate

through multiple distribution channels both foreign and domestic. The company will

start primarily with distribution through the Internet while building a regional presence

through retail outlets. Growth strategies will include marketing to large mass retailers

and global distribution through increased Internet sales. The company is dedicated to

creating a fantasy for its customers through romantic packaging and euphoric-tasting

chocolate.

2.1 Company Ownership

The company will be organized as an “S” Corporation organized by Taylor Delacourt,

President. The company logo will be trademarked through the U.S. Department of

Commerce Patent and Trade Mark Office.

Taylor’s experience consists of 22 years of business management, two years of property

management, three years as Chief Financial Officer, and 40 years as a dedicated

chocolate connoisseur. As a business manager, Taylor gained experience in all aspects of

running a business including finance and accounting, marketing, sales, office

management, new business start-up, and venture capital.

2.2 Start-Up Summary

Sweet Papaya will be based upon Taylor working full-time with no other initial

employees. Taylor’s primary responsibilities during the beginning phase of the start-up

operation are to get the business licenses, begin office operations, purchase necessary

equipment, design packaging, get the web site designed and online. The initial costs to

get the primary functions of the business operational are $21,150.

The beginning inventory necessary to begin is $500. A short-term, non-interest bearing

loan has been secured for $2,500 and a long-term investor is secured for $5,000 with no

interest accruing. The remaining start-up expenses and operational costs will be secured

with a long-term small business loan.

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Table 2.2: Start-Up Expenses

Start-Up Expenses

Legal $250

Office Supplies $300

Furniture $150

Insurance $500

Rent $50

Software $150

Marketing Materials $3,000

Web Site Development $10,000

Search Engine Placement $1,250

Expensed Equipment $3,500

Other $2,000

Total Start-Up Expenses $21,150

Start-Up Assets Needed

Cash Requirements $0

Start-up Inventory $500

Other Short-term Assets $0

Total Short-term Assets $500

Long-term Assets $0

Total Start-up Requirements: $21,650

Left to Finance: $21,150

Start-Up Funding Plan

Investment

Investor I $5,000

Other $2,500

Total Investment $7,500

Short-term Liabilities

Unpaid Expenses $0

Short-term Loans $0

Interest-free Short-term Loans $2,500

Subtotal Short-term Liabilities $2,500

Long-term Liabilities $5,000

Total Liabilities $7,500

Loss at Start-up -$7,500

Total Capital $0

Total Capital and Liabilities $0

Checkline $0

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Expenses Assets Investment Loan

$0

$5,000

$10,000

$15,000

$20,000

$25,000

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2.3 Company Locations and Facilities

Taylor will be utilizing 300 sq. ft. in the kitchen and 400 square sq. ft. in the designated

office of her home. The kitchen will be utilized for design and production, and the office

will be utilized for marketing, office functions, sales, and accounting functions.

3.0 Products

Changing consumer demographics, healthy eating, and economic issues will all directly

impact the future of confections in the United States. Both non-chocolate and chocolate

confections will be highly influenced by the American consumer’s changing preferences.

All products are 100% organic and made of premium chocolate.

All products are packaged in jewel toned boxes with the primary color being

purple. The boxes are trimmed with lace and jewels/pearls for a romantic touch.

1.5 – 3.5 chocolate bars in milk, white, and dark organic chocolate and many

exotic flavors.

Clam shells made with milk chocolate mousse filling.

Truffles made with milk and dark chocolate and many exotic flavors.

Chocolate sauces in milk and dark chocolate.

Vitamin-enriched chocolate bars.

Twist chocolates in milk, white, and dark chocolate. Individually wrapped

chocolates.

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3.1 Competitive Comparison

Dagoba Moonstruck Euphoria Endangered

Species

Founded 2001 1993 1985 1995

Location Ashland, OR Portland, OR Eugene, OR Talent, OR

Specialty Organic Truffles Truffles

Endangered

Species

Prices 12 bars for $36

$33 for 10 Crescent Moon

Truffles

$27.95 for 12 Assorted

Truffles

$27 for 12-3.25 oz Belgian

chocolate bars

Packaging Ecologically friendly Red, midnight blue, silver

foil boxes Gold boxes

Wrappers feature close-ups and

information about wild animals

Other Offerings

Chocolate bars,

drinking chocolate, chocolate coffee

beans, gifts Chocolate cafes, espresso

drinks

Chocolate sauces, specialty chocolate

made with local wines, chocolate fountains,

gifts

Trading cards,

endangered species named

candies

Strengths

First 100% certified chocolate company,

strong brand recognition,

developed distribution

channels, numerous awards

Unique flavors, multiple box sizes, offered in the

Academy Awards gift baskets

Strong brand recognition, excellent reputation, customer

loyalty, developed distribution channels

Unique product line,

environmental

and charitable hook

Weaknesses Limited product line Limited distribution Limited distribution

Limited

distribution, limited product

line

Website dagobachocolate.com moonstruckchocolateco.com euphoriachocolate.com chocolatebar.com

Distribution Internet, mass

retailers

Internet, Chocolate Cafes,

Wild Oats, other specialty grocers

Internet, company-owned stores, Made in

Oregon stores, regional grocers

Internet, New

Seasons, Wild Oats

3.2 Sales Literature

Sweet Papaya will develop sales brochures listing their product line and prices. Included

in the literature will be the history of the company, the dedication to creating the fantasy

and producing a quality product, and contact information. These brochures will be used

for direct marketing as well as included in orders placed online.

3.3 Future Products

Sweet Papaya will be continually creating new products to hold and gain market share.

Product lines including:

Bath & Body products

Gourmet cooking items

Cooking sauces

Specialty lines catering to specific market groups such as couples, women, and

children.

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4.0 Market Analysis Summary

The NCA estimates chocolate sales reached $15.1 billion in 2004 (up 3.9%) while the

sales of non-chocolate confections witnessed only a slight increase of 1.6% to $7.8

billion in 2004. The majority of those sales occurred in supermarkets; they reported sales

of $4.2 billion. When holidays occur on Saturdays or when there is a shorter shopping

season, chocolate sales will decrease. There will be a longer shopping season of 32 days

in 2006.

Everyone loves chocolate. But ever-growing concerns among consumers about their

health and the increasing incidence of obesity have kept consumption levels flat, even as

marketer competition and innovation have been dampened by a sluggish economy,

market consolidation, and rising costs. Even Hershey raised wholesale prices on its

product line in December 2004. Packaged Facts reports that along with caloric and carb

concerns, demographics conspire against any near-future surge in market growth.

Chocolate candy product introductions over the studied 2000-2004 period reveal three

key market drivers: Upscale/gourmet, no or low carb/sugar, and natural-related/organic

claims. Packaged Facts reports other important trends include functional/fortified

chocolates and a continued focus on only-for-kids candies. The company further states,

“Smaller, bit-size, easy-open/resealable, and portable candies remain the growth area in

the market because they provide extra convenience for impulse and grab-and-go eating.”

An important aspect for our market aside from niche products, such as sugar free and low

carb, is the fact that nearly 10% of the chocolate market is regarded as premium.

Packaged Facts estimates U.S. sales of premium chocolates approached $1.5 billion in

2004. U.S. retail sales of gourmet chocolates more strictly defined are estimated at $1.1

billion. Sales growth in organic chocolates, which have emerged as an important niche

within the gourmet market, are estimated at 30% annually. According to a Productscan

report on package tags (featured products claims) on 200 premium chocolate candy

products or product lines introduced in 2004, dark chocolate (with 91 tags) is nipping at

the heels of milk chocolate (104 tags), although bittersweet chocolate (13) remains less

common than white chocolate (36). Nuts (172 tags overall, including praline), led by

almond (42), are even more popular as inclusions than fruit (116), led by raspberry (22).

Gourmet chocolate consumers favor products with higher cocoa content percentages and,

as is the case with wine and gourmet coffee, varietals and origins. As consumer tastes

become more educated, marketers are introducing many dark chocolate products with

cocoa contents of 50% or more and, conversely, with less sugar content and minimal if

any fillings and inclusions. Packaged Facts notes “a trend extension that similarly has

best-seller potential is the trickle down of the cocoa content craze to milk chocolates,

represented by creamy but less sweet products.”

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4.1 Market Segmentation

Researchers estimate that about 2/3 of U.S. adults indulge in the consumption of

chocolate candy, while ¼ eat non-chocolate candy. Chocolate candy is so popular that no

major demographic group stands out for significantly higher-than-average usage rates. In

the premium category, however, the attitudes and demographics are distinctive.

Packaged Facts reports premium chocolate consumers are only slightly more likely than

average to frequently eat sweets at an index of 106, compared with an index of 116 for

chocolate candy consumers overall (and of 136 for heavy consumers of chocolate candy).

Premium chocolate users are also less likely than average to indulge in unhealthy treats

(index of 90) or to often snack between meals (index of 94), and conversely are more

likely than average to snack on health foods (index of 128) and to try new health foods

(index of 149). In addition, women are much more likely than average (index of 124) to

most often use premium chocolate brands (index of 124), though they are only somewhat

more likely than average to use chocolate candy overall (index of 106). Moreover,

Northeasterners are prime users of premium chocolates (index of 137), though they are

slightly below average for chocolate candy overall (index of 95), a pattern that also

applies to those with residences valued at over $300,000 (at indexes of 149 and 94,

respectively).

Hispanics are overall significantly less likely than average (index of 72) to indulge a

sweet tooth – only 33% frequently eat sweets, according to Simmons, compared with

41% of Asians, 43% of blacks, and 47% of non-Hispanic whites. Correspondingly, only

45% of Hispanics frequently snack, compared with 63% of non-Hispanic whites and 65%

of blacks. At the same time, the population aged five to 24, the prime consumers of

chocolate products, will grow by only 10% over the 2005-2010 period, against a 28%

share of the total population, with the 10-14 age bracket posting a decline in total

numbers. Population growth will center in the Boomer-heavy 50-69 age bracket, which

rank slightly below average even among adults in frequent consumption of sweets or

snacks.

4.1.1 SWOT Analysis

An analysis of Sweet Papaya’s strengths, weaknesses, opportunities and threats

concluded the following:

Strengths:

Sweet Papaya’s reputation for premium quality products and competitive pricing.

Excellent customer service.

The ability to customize products to meet the needs of our clients.

An online store for easy access to our products and staff.

Minimal capital investment because of small start-up costs and the home-based

facilities.

Management’s knowledge of the product and industry.

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Dedication to providing an experience when the customer consumers the product

rather than just a consumable product.

A creative staff and philosophy that will drive a philosophy of trendsetting

through market research, customer knowledge, and listening.

Weaknesses:

Limited resources in the preliminary growth stages.

Limited brand awareness.

Steep learning curve as new entrant into the market

Lack of relationship with the wholesale market.

Lack of automated production equipment until cash flow improves.

Poor market penetration.

Lack of networking/working relationship with mass retailers and global network.

Limited specific expertise/resources in the confectionery industry.

Opportunities:

Baby Boomer market is the fastest growing segment of the market. This segment

of the market prefers premium, organic chocolate to other confections.

Growing belief in the health benefits of organic products and dark chocolate.

Asian markets are largely unserved by this product and provide a large market

opportunity when the company expands into the global market.

A product catering to women through targeted packaging and flavors.

Very few organic competitors in a growing segment of the confectionery market.

Threats:

Lack of automated production and packaging equipment.

Lack of sales/marketing force.

Increased cocoa bean prices.

Scientific studies that may sway consumer’s tastes and health concerns.

Difficulty is establishing brand awareness and consumer interest.

4.2 Industry Analysis

There were 358 new product lines in 2004, up from 264 in 2000. One year’s crop of new

SKUs is several times the assortment typically carried by chain retailers, who can stock

only two to three percent of the available products. Prioritizing linear-foot profits over

depth of selection, chain retailers – particularly Wal-Mart, which jettisons up to 20% of

its products each year, according to BusinessWeek, are pressuring marketers to weed out

slower-moving brands and SKUs.

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Confectionary Overview:

The overall U.S. candy market is largely mature, and health and diet concerns (including

childhood obesity) dampen the prospects or internal growth.

Given the maturity of the market, health concerns, and unfavorable demographic factors

on the one hand and the continued growth in premium chocolates on the other, Packaged

Facts projects that U.S. retail sales of chocolate candy will grow at 4% annually over the

upcoming five-year period. At this rate, the market will approach $17.8 billion by 2009.

Annual sales growth for organic chocolates is estimated at 3% annually. According to

Productscan data on package tags (featured product claims), the number of organic

chocolate candy introductions climbed from nine in 2000 to 18 in 2004, while the number

of natural chocolate candy introductions rose from 20 to 51.

Private label is somewhat weak in chocolate candy compared to other food categories, at

9.3% of dollar sales in chocolates versus 14% for food categories overall. Nonetheless,

store brands have weighed in very respectably for gift box (18.7%) and seasonal (13.5%)

chocolates.

Nutrition-related claims, including low sugar, low card and organic, are among the most

important new product appeals. The household group also tends to have more flexibility

toward the brand they purchase, which means if a store is out of the brand they intend to

buy, they will buy another brand that is on sale and/or looks good to them.

The self-purchase group, on the other hand, is willing to go to another store to get the bar

they consider their favorite “everyday” chocolate bar.

Regarding category trends, the survey respondents say low-fat and fat-free products

aren’t as good tasting as regular chocolate. The respondents also mentioned concerns

about such products’ ingredients and whether they might be some ingredient in the

reformulated chocolate that is equally bad for them.

Demand for Cocoa:

The demand for cocoa is influenced by several factors:

Price – a rise in cocoa prices leads to a fall in demand.

Income – the income of individuals has a significant effect on their purchase of

chocolate and so impacts on demand. Countries with high GDP are also high

cocoa consumers.

Population and population structure – the size of a country’s population affects its

demand for cocoa. The structure of its population is also important as young

people tend to eat more chocolate than older people.

Taste and preferences – Climate and cultural differences can affect demand for

cocoa. Those in warmer climates tend to eat less chocolate than those in colder

climates. Culture and preferences can sometimes explain low consumption

figures.

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Asia offers strong growth potential for the chocolate industry because of the sheer size of

the market which includes highly populous China, India and Indonesia. Despite its size,

Asia only accounts for around 10% of the world chocolate confectionary consumption.

Per capita consumption of chocolate confectionery in Asia is very low so there is plenty

of scope to boost it. In the 2001-2002 cocoa year, world consumption was around 0.530

kilograms per head (or 0.967 kilograms per head excluding China, India and Indonesia

whose large populations have a disproportionate effect on world per capita consumption).

There are, however, wide variations in consumption levels between the regions.

Countries in Europe consume on average around 1.868 kilos per head, the America 1.197

kilos, Asia and Oceania 0.106 kilos, and Africa 0.134 kilos.

The global confectionery market reached as estimated value of $73.2 billion in 2001, an

increase of 21% since 1996. The European market is the world’s largest, accounting for

42% of revenues for confectionery worldwide, followed by the Americas. Though

chocolate has reached all regions of the world, 60% of all chocolate is still consumed in

the mature chocolate markets of the U.S. and European Union, representing only 20% of

the world population. Volume growth is difficult to achieve in the traditional markets of

the US and EU, but there are opportunities for value growth with the introduction of

premium chocolates, snack products and functional foods.

4.2.1 Industry Participants

The table below is lists the top ten global confectionery companies that manufacture

some form of chocolate by total confectionery sales value in 2003:

Mars Inc $ 8,145 millions

Nestle Sa $ 7,771 millions

Cadbury Schweppes PLC $ 5,890 millions

Ferreroa SpA $ 4,769 millions

Hershey Food Corp $ 4,120 millions

Kraft Foods $ 3,122 millions

Wm. Wrigley Jr. Co. $ 2,746 millions

Barry Callebaut AG $ 2,547 millions

Perfetti Van Melle SpA $ 1,599 millions

Lindt & Sprungli $ 1,212 millions

4.2.2 Distribution Patterns

Distribution patterns in the gourmet chocolate industry as such that small, independent

manufacturers can compete in the niche market successfully through the Internet and

retailers that specialize in the gourmet and organic market. Developing a loyal customer

base is the key element in distribution in this industry. When brand awareness and

customer loyalty have started to take hold, distribution through local and regional

markets becomes more readily accessible.

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4.2.3 Competition and Buying Patterns

Large, established companies in the industry have economies of scale that will not be

possible for a small, start-up company. Large manufacturers, however, traditionally

compete at a different price point than smaller, more specialized manufacturers.

Research shows the main difference between mass market consumers is that respondents

who bought chocolate candy primarily for themselves were driven by personal cravings

for chocolate, but respondents who bought mainly for their household were concerned

with pleasing the entire family. Household purchase groups make brand decisions based

on chocolate candies that will make themselves and their families feel good, indicating

chocolate is a comfort food for them and they buy it when they want to do something

nice for their families. They base their brand purchase decisions on chocolate candies

that they liked as children, but are not as loyal to the type of chocolate they purchase.

They are more willing to buy a variety that is on sale or a variety for which they have a

coupon.

5.0 Strategy and Implementation Summary

Sweet Papaya will pursue local, regional, national and global markets through different

distribution channels primary centering on Internet sales. We will use our unique product

packaging and corporate dedication to creating a romantic, euphoric product to propel

sales and direct marketing into key outlets.

Initial revenues will be generated by Internet sales and local distribution.

Regional and national sales will follow.

Women will be targeted first.

5.1 Marketing Strategy

A product launch of chocolate bars, which continue to dominate the candy category

despite growing competition and consumer interest in “healthful” alternatives, would

combine two popular categories of organic and chocolate bars. 1.5 to 3.5-ounce candy

bars are still the 800-pound gorilla of the candy industry.

There are four general trends in the candy bar world: increasing variety in product shapes

and packaging; research into untapped sales venues; continuing consumer acceptance of

reduced-fat items; and more promotional co-branding with partners from other industries.

Adding vitamin-enriched bars would also be a good addition to the product line. This

would address consumer concerns about chocolate contributing to obesity while also

servicing a segment of the market less inclined to eat organic chocolate, the five-14 year

olds.

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The growing trend toward low-cal, low-fat products appears to have benefited the

premium chocolate market. The increase in awareness about calories and related health

concerns has created a backlash effect among some consumers who still want to treat

themselves regardless of calorie or fat concerns being expressed by other consumers.

Many people who won’t buy health products if they don’t taste great will restrict their

frequency of consumption, saying: “If I’m going to eat less chocolate, what I eat is going

to be top-quality chocolate.” In addition, fat content is a non-issue in Europe, which

means future European imports will not be low-fat. This fact supports our drive towards

top-quality, premium chocolate products that strive for euphoric taste without an

emphasis on calorie content. Sugar Free and Low Carb bars will be offered, as they are a

growing segment of the market.

We will introduce a broad assortment of chocolate gift boxes in romantic packaging, as

well as Twist products, which are individually wrapped chocolates that can be sold

individually. Proprietary product lines of truffles, clam shells, and chocolate sauces will

be the base product line.

Using a batch process, the company will devote nearly 65% of its output to base product

line. By retaining the integrity of the chocolate-making process while simultaneously

investing in high-end automation and technology, the company can deliver premium

products at affordable price points. It all revolves around the company’s triple bottom-

line mission, which focuses on delivering creativity, quality and price to an ever-

expanding circle of chocolate –loving consumers.

5.1.1 Pricing Strategy

Product will be sold as a premium product while attempting to make the product

affordable.

1.5 ounce chocolate bars will be sold at $1.75 a piece

3.5 ounce chocolate bars will be sold at $2.50 a piece

Truffles will sell for $2.00 a piece.

A 2-truffle box will sell for $3.95.



An 8-truffle box will sell for $15.50.


Clam shells will sell for $9.50 per pound.

Chocolate sauces sell for $7.50 for a 4 ounce jar.

The vitamin-enriched chocolate bars sell for $5.00 a piece.

Twist chocolate sell for .50 each.

Bulk discounts will start at 5% on orders over $500.

Credit terms will be extended to retailers.

Internet customers will pay shipping costs.

Retailers will pay shipping costs.

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5.2 Sales Strategy

Sweet Papaya’s sales strategy is to start with limited capitol on the Internet to keep start-

up costs low while building a product following. While building the Internet sales, local

and regional retailers will be contacted for increased outlets by the first quarter of 2007.

The projection is for 20% of sales to be achieved in the local/regional market by the first

quarter of 2007.

As brand awareness, economies of scale, customer loyalty, and industry knowledge

increase during 2007, a move into the national market will be coordinated for 2008

growth projections of 10% of sales in the national market.

A global growth projection of 5% will be the forecast for 2009.

5.2.1 Sales Forecast

Sweet Papaya projects revenues of $50,000 for the first year. The first quarter of 2007

will see movement into the local and regional markets, projected to be 10% of annual

sales. Increased brand awareness and distribution channels should produce stellar growth

rates for the first five years as revenues increase steadily in the Internet market.

Expanding distribution into the national and global markets will produce revenues of

almost $1.2 million by the year 2010. The national market is projected to be 10% of

annual sales in the year 2008, and 5% for the international market in the year 2009. The

Direct Cost of sales is projected to be 10% of annual sales.

The following chart and graph reflect the realistic goals we have set.

Table 5.2.1 Sales Forecast

Sales 2006 2007 2008 2009 2010

Internet $50,000 $150,000 $262,500 $459,375 $803,906 Local/Regional Market $0 $15,000 $45,000 $90,000 $180,000

National Market $0 $0 $25,000 $50,000 $100,000

Global Market $0 $0 $0 $45,000 $90,000

Total Sales $50,000 $165,000 $332,500 $644,375 $1,173,906

Direct Cost of Sales

Internet $5,000 $15,000 $26,250 $45,938 $80,391 Local/Regional Market $0 $1,500 $4,500 $9,000 $18,000

National Market $0 $0 $2,500 $5,000 $10,000

Global Market $0 $0 $0 $4,500 $9,000 Subtotal Cost of Sales $5,000 $16,500 $33,250 $64,438 $117,391

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$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

$1,100,000

$1,200,000

2006 2007 2008 2009 2010

Sales Direct Cost of Sales

6.0 Management Summary

As stated earlier in 2.1 Company Ownership, the management of the company will be

handled by Taylor Delacourt. As President of Sweet Papaya., Taylor brings 22 years of

management experience to the position. Taylor holds a Bachelor of Science degree in

finance. Taylor’s education and experience in the candy and confectionary industry

comes from years of baking and non-profit catering provided through referral. Taylor

began her office management experience in 1982 while working for a start-up general

contractor until 1993. This was the first small business start-up company she managed.

From 1994 until 1999, Taylor was the President of Jubilee, another start-up small

business. As President of Jubilee, Taylor started a manufacturing and distribution

company that grew to a $1.3 million company before selling to a larger manufacturer in

1999. In 1999, Taylor finished her undergraduate studies. Taylor will handle all aspects

of the start-up and daily operations.

6.1 Personnel Plan

The following table illustrates the Personnel Plan for Sweet Papaya Specific needs,

compensation, and timing are indicated for each position.

19

Table 6.1: Personnel Plan

7.0 F

i

n

ancial Plan

The financial plan for Sweet Papaya is presented in detail in the following sections. The

business will be financed mainly through cash flow. The main investment is for initial

equipment, inventory, and operating expenses.

7.1 Important Assumptions

The financial plan depends on financial assumptions, most of which are shown in the

following table. Current short-term interest rates are calculated at a rate of 0%. If future

short-term loans are used, the assumed interest rate will be used. During the first year of

business, all sales will be via Internet and paid upon order so no Collection Days

estimation or Sales on Credit % has been calculated. There is no payroll until the second

year of business so no Personnel Burden % has been calculated during the first year.

Table 7.1: General Assumptions

Personnel 2006 2007 2008

2 Production Workers $0 $25,000 $25,000

1 Office Assistant $0 $0 $25,000

Total Payroll $0 $25,000 $50,000

Total Headcount 0 2 3

2006 2007 2008

Short-Term Interest Rate 0.00% 10.00% 10.00%

Long-Term Interest Rate 10.00% 10.00% 10.00%

Payment Days Estimator 35 35 35

Collections Days Estimator 0 30 30

Tax Rate % 20.00% 20.00% 20.00%

Expenses in Cash % 25.00% 25.00% 25.00%

Sales on Credit % 0.00% 10.00% 15.00%

Personnel Burden % 0.00% 15.00% 15.00%

20

7.2 Break-even Analysis

Proposed Break-even

The following table and chart summarize our break-even analysis. With fixed costs of

$13,411 per year and variable costs of $0.11 per 3.5 ounce chocolate bar, we need to bill

$14,028 to cover our costs at a price point of $2.50 per chocolate bar. Break-even, based

upon fixed initial market overheads, will be attained prior to the end of year one. An

expanded product line, economies of scale, increased market share, cost control,

investments in equipment, and market maturation will accelerate profitability.

Break-even should be attained by month five figuring sales of 50 bars per day using a 23-

day month. 5611 - 3.5 ounce chocolate bars divided by 50 bars per day equals 112 days

divided by 23 days per month equals 4.88 months until break-even.

Table 7.2: Break-even Analysis

FIXED COST $ 13,411

VARIABLE COST $ 0.11

NUMBER OF UNITS 375

UNIT PRICE $ 2.50

NET UNITS

NET REVENUE FIXED COST

VARIABLE COST

TOTAL COST TOTAL PROFIT

0 $15 $13,411 $0 $13,411 ($13,396)

375 $938 $13,411 $42 $13,453 ($12,515)

750 $1,875 $13,411 $83 $13,494 ($11,619)

1,125 $2,813 $13,411 $125 $13,536 ($10,724)

1,500 $3,750 $13,411 $167 $13,578 ($9,828)

1,875 $4,688 $13,411 $209 $13,620 ($8,932)

2,250 $5,625 $13,411 $250 $13,661 ($8,036)

2,625 $6,563 $13,411 $292 $13,703 ($7,141)

3,000 $7,500 $13,411 $334 $13,745 ($6,245)

3,375 $8,438 $13,411 $376 $13,787 ($5,349)

3,750 $9,375 $13,411 $417 $13,828 ($4,453)

4,125 $10,313 $13,411 $459 $13,870 ($3,558)

4,500 $11,250 $13,411 $501 $13,912 ($2,662)

4,875 $12,188 $13,411 $543 $13,954 ($1,766)

5,250 $13,125 $13,411 $584 $13,995 ($870)

5,625 $14,063 $13,411 $626 $14,037 $25

6,000 $15,000 $13,411 $668 $14,079 $921

21

Breakeven Analysis

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

$13,000

$13,500

$14,000

$14,500

$15,000

$15,500

$16,000

0

375

750

1125

1500

1875

2250

2625

3000

3375

3750

4125

4500

4875

5250

5625

6000

NET UNITS (000)

CO

ST

-SA

LE

S-P

RO

FIT

7.3 Projected Profit and Loss

Our projected profit and loss is shown in the following table, with revenue increasing

from $50,000 in the first year to $332,500 in the third year. This is attained by expanding

marketing efforts from Internet only in the first year to the regional wholesale market in

the second year, to national and global sales by year five. It is also attained by investing

in commercial production equipment; lower input costs through more efficient, high

quantity purchasing; and movement into the wholesale market.

Per Unit x Volume = Total %

Revenue $ 2.50

Variable Expenses $ 0.11

Contribution Margin $ 2.39 x 5,611.3 = $ 13,411 95.60%

Fixed Expenses $ 13,411

Operating Income $ -

Volume in units at break even = 5,611.3 units

Total revenues at break even = $14,028.24

22

Table 7.3: Projected Profit and Loss

2006 2007 2008

Sales $ 50,000 $ 165,000 $ 332,500

Direct Costs $ 5,000 $ 16,500 $ 33,250

Depreciation $ 565 $ 2,750 $ 5,650

Total Cost of Goods Sold $ 5,565 $ 19,250 $ 38,900

Gross Profit $ 44,435 $ 145,750 $ 293,600

Expenses:

Advertising $ 1,000 $ 3,300 $ 6,650

Charitable Contributions $ 250 $ 825 $ 1,663

Credit Card Fees $ 50 $ 165 $ 333

Delivery Expenses $ 450 $ 1,485 $ 2,994

Dues and Subscriptions $ 25 $ 40 $ 55

Insurance $ 525 $ 550 $ 575

Maintenance $ 100 $ 250 $ 400

Miscellaneous $ 250 $ 500 $ 750

Office Expenses $ 2,500 $ 8,250 $ 16,625

Operating Supplies $ 5,000 $ 16,500 $ 33,250

Payroll Taxes $ - $ 2,760 $ 5,520

Permits and Licenses $ 25 $ 100 $ 125

Postage $ 156 $ 246 $ 516

Professional Fees $ 250 $ 3,000 $ 5,000

Repairs $ 100 $ 2,500 $ 4,500

Telephone $ 480 $ 504 $ 528

Travel $ 2,250 $ 4,700 $ 7,350

Wages $ - $ 25,000 $ 50,000

Total Expenses: $ 13,411 $ 70,675 $ 136,833

Income (Loss) Before Taxes $ 31,024 $ 75,075 $ 156,767

Taxes $ 6,205 $ 15,015 $ 31,353

Net Income (Loss) $ 24,819 $ 60,060 $ 125,414

Net Profit/Sales 49.64% 36.40% 37.72%

23

7.4 Projected Cash Flow

Initially cash flow will be supported by the personal savings accounts of the head officer

along with a $2,500 short-term loan and a $5,000 long-term loan. Both loans are interest

free.

$(1,000)

$1,500

$4,000

$6,500

$9,000

$11,500

$14,000

$16,500

$19,000

$21,500

$24,000

$26,500

$29,000

Jan Feb Mar April May June July Aug Sept Oct Nov Dec

Cash Flow Cash Balance

24

Table 7.4: Projected Cash Flow

2006 2007 2008

Cash Flows From Operating Activities

Net Income (Loss) $ 24,819 $ 60,060 $ 125,414

Plus:

Depreciation $ 565 $ 2,750 $ 5,650

Short Term Investments (Increase) Decrease $ (2,500) $ - $ -

Inventory (Increase) Decrease $ 1,750 $ 500 $ -

Income Tax Payable Increase (Decrease) $ 6,205 $ 8,810 $ 16,338

Net Cash Provided From Operating

Activities $ 30,839 $ 72,120 $ 147,402

Cash Flows From Investing Activities

Investment in Equipment $ (5,650) $ (21,850) $ (29,000)

Cash Flows From Financing Activities:

Long Term Borrowings $ 5,000 $ - $ -

Payment(s) on Long Term Debts $ 1,000 $ 1,000 $ 1,000

Total Financing Activities $ 4,000 $ (1,000) $ (1,000)

Increase (Decrease) in Cash $ 29,189 $ 49,270 $ 117,402

Cash Balance at the Beginning of the Period $ - $ 29,189 $ 78,459

Cash Balance at the End of the Period $ 29,189 $ 78,459 $ 195,861

7.5 Projected Balance Sheet

Projected Balance Sheets follows:

25

Table 7.5: Projected Balance Sheet

Assets

Current Assets

Starting

Balance 2006 2007 2008

Cash and Cash Equivalents $ 5,000 $ 29,189 $ 78,459 $ 195,861

Short Term Investments 2,500 - - -

Inventory - 1,750 2,250 2,250

Total Current Assets 7,500 30,939 80,709 198,111

Plant & Equipment

Tools - 2,000 4,000 8,000

Equipment - 3,500 18,500 33,500

Office Equipment - 150 5,000 15,000

Total Equipment - 5,650 27,500 56,500

Accumulated Depreciation - 565 3,315 8,965

Undepreciated Cost of Equipment - 5,085 24,185 47,535

Total Assets $ 7,500 $ 36,024 $ 104,894 $ 245,646

Liabilities

Current Liabilities

Income Tax Payable - 6,205 15,015 31,353

Notes Payable - Short-Term 2,500 - - -

Notes Payable - Current Maturities

of Long Term Debt - - 1,000 1,000

Total Current Liabilities 2,500 6,205 16,015 32,353

Notes Payable - Long Term Debt 5,000 5,000 4,000 3,000

Total Liabilities 7,500 11,205 20,015 35,353

Owner's Equity

Retained Earnings-Beginning of Year - 24,819 84,879 210,293

Dividends Paid - - - -

Current Year Net Income/(Loss) - - - -

Total Owner's Equity - 24,819 84,879 210,293

Total Liabilities and Owner's Equity $ 7,500 $ 36,024 $ 104,894 $ 245,646

26

7.6 Business Ratios

The following are generated business ratios.

Table 7.6: Projected Business Ratios

Ratio 2006 2007 2008

Gross margin 88.9% 88.3% 88.3%

Operating margin 62.0% 45.5% 47.1%

Pretax margin 62.0% 45.5% 47.1%

After-tax profit margin 49.6% 36.4% 37.7%

Pretax ROE 125.0% 88.4% 74.5%

After-tax ROE 100.0% 70.8% 59.6%

Return on invested capital before tax 620.5% 1876.9% 5225.6%

Return on invested capital after tax 496.4% 1501.5% 4180.5%

ROA before interest and tax 86.1% 71.6% 63.8%

ROA after tax 68.9% 57.3% 51.1%

Return on working capital 100.3% 92.8% 75.7%

Liquidity ratios

Current ratio 5.0 5.0 6.1

Quick ratio 4.7 4.9 6.1

Cash ratio 4.7 4.9 6.1

Inventory turnover 3.2 8.6 17.3

Cash to total assets 0.8 0.7 0.8

Current assets to total assets 0.9 0.8 0.8

Quick assets to total assets 0.8 0.7 0.8

Inventory to working capital 0.1 0.0 0.0

Inventory to current assets 0.1 0.0 0.0

Working capital turnover 2.0 2.6 2.0

Debt ratios

Times interest earned

Total debt to total assets 13.9% 3.8% 1.2%

Debt to equity 20.1% 4.7% 1.4%

Debt to total invested capital 100.0% 100.0% 100.0%

Common equity to total invested capital 0.0% 0.0% 0.0%

Total equity to total assets 68.9% 80.9% 85.6%

Funded debt to working capital 20.2% 6.2% 1.8%

27

Other ratios

Asset turnover 1.4 1.6 1.4

Retained earnings to net income 1.0 1.4 1.7

Sales to net worth 2.0 1.9 1.6

Fixed asset turnover 9.8 6.8 7.0

Computed values

Operating income 31,024 75,075 156,767

Owner's equity / Net worth / Book value 24,819 84,879 210,293

Working capital 24,734 64,694 165,758

Cash and equivalents 29,189 78,459 195,861

Quick assets 29,189 78,459 195,861

Total invested capital 5,000 4,000 3,000

Net fixed assets 5,085 24,185 47,535

Net receivables - - -

Average sales per day 1,666.7 5,500.0 11,083.3

Average cost of goods sold per day 185.5 641.7 1,296.7

Days' sales in inventory 9.4 3.5 1.7

Days' sales in receivables - - -

Net sales (sales to use in computations) 50,000 165,000 332,500

Other current assets - - -

Long-term assets - - -

Long-term debt 5,000 4,000 3,000

Other long-term liabilities 5,000 4,000 3,000

Primary shares

Effective tax rate 20% 20% 20%

28

Assets

Current Assets

Starting

Balances Jan Feb Mar April May June July Aug Sept Oct Nov Dec

Cash $ 5,000 $ 5,000 $ 7,215 $ 8,297 $ 9,542 $ 10,973 $ 12,619 $ 14,512 $ 16,689 $ 19,192 $ 22,071 $ 25,381 $ 29,189

Short-Term Investments $ 2,500 $ 2,500 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Inventory $ - $ 500 $ 675 $ 742 $ 817 $ 898 $ 988 $ 1,087 $ 1,196 $ 1,315 $ 1,447 $ 1,591 $ 1,750

Total Current Assets $ 7,500 $ 8,000 $ 7,890 $ 9,040 $ 10,358 $ 11,871 $ 13,607 $ 15,599 $ 17,884 $ 20,507 $ 23,517 $ 26,973 $ 30,939

Long-Term Assets

Plant & Equipment $ - $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650

Accumulated Depreciation $ - $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565

Total Long-Term Assets $ - $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215

Total Assets $ 7,500 $ 13,085 $ 12,975 $ 14,125 $ 15,443 $ 16,956 $ 18,692 $ 20,684 $ 22,969 $ 25,592 $ 28,602 $ 32,058 $ 36,024

Liabilities and Owner's Equity


Income Tax Payable $ - $ 1,600 $ 1,578 $ 1,808 $ 2,072 $ 2,374 $ 2,721 $ 3,120 $ 3,577 $ 4,101 $ 4,703 $ 5,395 $ 6,205

Notes Payable – Short-Term $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ - $ - $ - $ -

Total Current Liabilities $ 2,500 $ 4,100 $ 4,078 $ 4,308 $ 4,572 $ 4,874 $ 5,221 $ 5,620 $ 6,077 $ 4,101 $ 4,703 $ 5,395 $ 6,205

Notes Payable - Long Term Debt $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000

Total Liabilities $ 7,500 $ 9,100 $ 9,078 $ 9,308 $ 9,572 $ 9,874 $ 10,221 $ 10,620 $ 11,077 $ 9,101 $ 9,703 $ 10,395 $ 11,205

Retained Earnings $ - $ 2,068 $ 4,137 $ 6,205 $ 8,273 $ 10,341 $ 12,410 $ 14,478 $ 16,546 $ 18,614 $ 20,683 $ 22,751 $ 24,819

Total Owner's Equity $ - $ 2,068 $ 4,137 $ 6,205 $ 8,273 $ 10,341 $ 12,410 $ 14,478 $ 16,546 $ 18,614 $ 20,683 $ 22,751 $ 24,819

Total Liabilities and Owner's Equity $ 7,500 $ 11,168 $ 13,214 $ 15,513 $ 17,845 $ 20,216 $ 22,631 $ 25,098 $ 27,623 $ 27,716 $ 30,386 $ 33,145 $ 36,024

Appendix A

Table 7.5: Projected Balance Sheet

29


Net Income $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068 $ 2,068

Plus:

Depreciation $ 565 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Short-Term Investments (Increase) Decrease $ (2,500) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Inventory (Increase) Decrease $ - $ - $ - $ - $ - $ - $ 290 $ 292 $ 292 $ 292 $ 292 $ 292

Income Tax Payable Increase (Decrease) $ (396) $ 3 $ 39 $ 81 $ 156 $ 240 $ 358 $ 529 $ 747 $ 987 $ 1,453 $ 2,008

Net Cash Provided From Operating Activities $ (263) $ 2,071 $ 2,108 $ 2,149 $ 2,224 $ 2,309 $ 2,716 $ 2,889 $ 3,108 $ 3,348 $ 3,813 $ 4,368

Cash Flows From Investing Activities

Investment in Equipment $ (5,650) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Cash Flows From Financing Activities:

Long-Term Borrowings $ 5,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Payment(s) on Long-Term Debts $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1,000

Total Financing Activities $ 5,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (1,000)

Increase (Decrease) in Cash $ (913) $ 2,071 $ 2,108 $ 2,149 $ 2,224 $ 2,309 $ 2,716 $ 2,889 $ 3,108 $ 3,348 $ 3,813 $ 3,368

Cash Balance at the Beginning of the Period $ - $ (913) $ 1,158 $ 3,265 $ 5,415 $ 7,638 $ 9,947 $ 12,663 $ 15,552 $ 18,660 $ 22,008 $ 25,821

Cash Balance at the End of the Period $ (913) $ 1,158 $ 3,265 $ 5,415 $ 7,638 $ 9,947 $ 12,663 $ 15,552 $ 18,660 $ 22,008 $ 25,821 $ 29,189

Appendix B

Table 7.4: Projected Cash Flow

30


Sales $ 500 $ 673 $ 906 $ 1,219 $ 1,641 $ 2,209 $ 2,973 $ 4,002 $ 5,387 $ 7,272 $ 9,854 $ 13,364

Direct Costs $ 50 $ 67 $ 91 $ 122 $ 164 $ 221 $ 297 $ 400 $ 539 $ 727 $ 985 $ 1,336

Depreciation $ 565 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Total Cost of Goods Sold $ 615 $ 67 $ 91 $ 122 $ 164 $ 221 $ 297 $ 400 $ 539 $ 727 $ 985 $ 1,336

Gross Profit $ (115) $ 606 $ 815 $ 1,097 $ 1,477 $ 1,988 $ 2,676 $ 3,602 $ 4,848 $ 6,545 $ 8,868 $ 12,027

Expenses:

Advertising $ 500 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45

Charitable Contributions $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 250 $ - $ -

Credit Card Fees $ 1 $ 1 $ 1 $ 1 $ 2 $ 2 $ 3 $ 4 $ 5 $ 7 $ 10 $ 13

Delivery Expenses $ 5 $ 6 $ 8 $ 11 $ 15 $ 20 $ 27 $ 36 $ 48 $ 65 $ 89 $ 120

Dues and Subscriptions $ - $ - $ - $ - $ - $ 25 $ - $ - $ - $ - $ - $ -

Insurance $ 525 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Maintenance $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8

Miscellaneous $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21

Office Expenses $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208

Operating Supplies $ 50 $ 67 $ 91 $ 122 $ 164 $ 221 $ 297 $ 400 $ 539 $ 727 $ 985 $ 1,336

Payroll Taxes $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Permits and Licenses $ 25 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Postage $ 39 $ - $ - $ 39 $ - $ - $ 39 $ - $ - $ 39 $ - $ -

Professional Fees $ 250 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Repairs $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8

Telephone $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40

Travel $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188

Wages $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Total Expenses $ 1,867 $ 593 $ 618 $ 692 $ 699 $ 787 $ 885 $ 959 $ 1,111 $ 1,608 $ 1,603 $ 1,989

Income Before Taxes $ (1,982) $ 13 $ 197 $ 405 $ 778 $ 1,201 $ 1,791 $ 2,643 $ 3,737 $ 4,937 $ 7,266 $ 10,039

Taxes $ (396) $ 3 $ 39 $ 81 $ 156 $ 240 $ 358 $ 529 $ 747 $ 987 $ 1,453 $ 2,008

Net Income $ (1,586) $ 10 $ 157 $ 324 $ 622 $ 961 $ 1,433 $ 2,114 $ 2,989 $ 3,950 $ 5,813 $ 8,031

Net Income/Sales -317.17% 1.53% 17.39% 26.60% 37.91% 43.51% 48.19% 52.83% 55.50% 54.31% 58.99% 60.09%

Appendix C

Table 7.3: Projected Profit and Loss

31


Short-Term Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Long-Term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Payment Days Estimator 35 35 35 35 35 35 35 35 35 35 35 35

Collections Days Estimator 0 0 0 0 0 0 0 0 0 0 0 0

Tax Rate % 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%

Expenses in Cash % 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

Sales on Credit % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Personnel Burden % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Appendix D

Table 7.1: General Assumptions

32

Appendix E

Loan and Reference Information:

Key Executives:

Business: Sweet Papaya

Form of Ownership: S Corporation

Loan Purpose: To purchase equipment, inventory, and provide cash flow for first

year of operating expenses.

Loan Amount: $35,000

Lending Institution:

Legal Consultant:

Accountant:

33

Appendix F PRINCIPAL’S RESUMES